Removing Risk from Your REI Career (CFFL 601)
Removing Risk from Your REI Career
Jack Butala: Removing Risk from Your REI Career. Every Single month we give away a property for free. It’s super simple to qualify. Two simple steps. Leave us your feedback for this podcast on iTunes and number two, get the free ebook at landacademy.com, you don’t even have to read it. Thanks for listening.
Jack Butala:
Jack Butala for Land Academy. Welcome to our Cash Flow From Land show. In this episode, Jill and I talk about removing risk from your REI career. Great show today, Jill. Before we start, let’s hear some funny stuff.
Jill DeWit:
It’s interesting that I am still surprised by the things that come out of your blog sometimes, Jack. What were you checking for titles today?
Jack Butala:
What?
Jill DeWit:
I’m not sure those will pass the …
Jack Butala:
My gosh.
Jill DeWit:
Who’s in charge of when you write a blog and you title … Is there an FCC? Who’s in charge of that kind of thing? I happen to,
Jack Butala:
You mean the boredom-
Jill DeWit:
… catch you.
Jack Butala:
The boredom factor?
Jill DeWit:
No, no, no, no. I caught the … I was lucky enough to sit in on your marketing meeting today. You guys are running through some title checker thing which I thought was really cool. I was just a little surprised by how far south you two took it looking for titles is what I’m trying to say.
Jack Butala:
What did you hear?
Jill DeWit:
I heard things like strippers. I heard things like how horrible it is to be Italian.
Jack Butala:
It’s not horrible to be Italian. It’s great to be Italian.
Jill DeWit:
No, wait. Not horrible, but what was the word? Shucks, I forgot what the terminology was.
Jack Butala:
Italian people, at times, communicate through yelling. I’m softening it for the show.
Jill DeWit:
You were working on something like a blog title and print titles. That’s what I caught. I was just like … I can’t believe I’m still surprised by what you guys come up with.
Jack Butala:
I’m having trouble being Italian. That was one of them.
Jill DeWit:
There you go. It was really funny. All good.
Jack Butala:
Yeah, that is some funny stuff that we heard today.
Jill DeWit:
Yes.
Jack Butala:
Boy, if I knew that was the topic, I would have some [insane 00:01:40] one-liners. Anyway, let’s take a question-
Jill DeWit:
That’s why you don’t know what’s coming until I get to say that.
Jack Butala:
Let’s take a question posted by one of our members on successplant.com, our free online community.
Jill DeWit:
Okay. Kyle says, “I’m just getting started in pulling my first list from Agent Pro. For property type, do I select agricultural/rural or residential vacant land?” Do you want to back up?
Jack Butala:
Can you take a crack at answering that?
Jill DeWit:
Well, I would like to back up and ask, if you would, Jack, explain what he’s trying to do here for people that might be just joining in.
Jack Butala:
Yeah. There’s lots of places to go get data. Most of them are … Well, some of them are very credible. What you want to make sure about any data that you pull is a couple of things. One that it’s fresh because properties get bought and sold all the time. If you have a database or a list … If you’re not accessing a database, chances are you have a list. A list can be old. It could be 20 years old, two years old, one year old. We don’t know. It could be from yesterday. You want fresh data. The best way to do that is to access the database.
Number two, you want that database for all product types, not just land, to have a assessed value. It’s the way that you can really scrub your data down and send offers to the right people. This is for apartment buildings. It’s for houses. It’s for vacant land, all product types. That’s how you gauge who you’re sending a letter to and that’s, in some ways, how you priced the offer. If you don’t have assessed value, you’re really taking a stab in the dark. What you’re going to end up doing is wasting a ton of postage. A ton of money on postage. The percentage of the number of offers that are going to return that are signed so you can do the deal will dramatically go down.
Agent Pro 24/7 is a useful tool. It’s about to be in our collection of tools in our products that we offer, but it’s not the best one out there. The one that we offer is the best one.
Kyle here, bless his heart, is clearly very new at this. He pulled a list from Agent Pro. Congratulations. It’s step one. It wouldn’t be my first choice. Then he’s asking if he should select agriculture, rural, or as we call it ag-rural or residential vacant. In a world where there’s no such thing as dumb questions, this is a fairly green question. Well, we’ll answer it anyway. The answer is you’re just going down the wrong path. Those should be included: agricultural, rural and residential vacant land. You’re missing a dramatic number of willing sellers. In our Cash Flow From Land program, not to belabor the point, I really go over this in great detail in front of the screen and show the viewer exactly how to scrub data to get the maximum results. It’s beyond the scope of the podcast here.
Jill DeWit:
I love it.
Jack Butala:
I hate to get all serious.
Jill DeWit:
I love it because it’s such a valid point. You don’t want to be sending out … We get them down to less than the price of a stamp. You don’t want to be sending out an offer that is going to the wrong people, and you’re wasting all that postage. That’s the thing, too. One important thing is I see people all the time trying to cut corners and they think they’re cutting corners by buying a cheaper product. You know what? They’re wasting their time and their money sending out more mailers into the wrong people.
Jack Butala:
Are you really saving money?
Jill DeWit:
You’re not saving any money.
Jack Butala:
It really-
Jill DeWit:
I know that because we did that and we did it all wrong.
Jack Butala:
Yeah, Jill. What was that?
Jill DeWit:
I can say. It’s funny. I’m like, “You know what? Hey, I don’t … ”
Jack Butala:
It’s the equivalent of this. If you sent a letter to all of the skyscrapers in Manhattan because you didn’t know they were skyscrapers, but you’re just looking at data, and you said, “I want to buy your building for $500,” you’re just going to make a tremendous amount of people angry, and you’re going to waste postage. By far the biggest component expense to what we teach with our members is postage. You want to make darn sure that you’re scrubbing this data right.
Jill DeWit:
Doing it right. Exactly.
Jack Butala:
We’re all learning from it. Nobody is busting on this guy at all. We all had to start somewhere. I started way below this level. At least he knows you got to pull some numbers from a database, pull some data from the database and send them offers. That took me like eight years to figure out.
Jill DeWit:
You didn’t even have this option back then.
Jack Butala:
No, we didn’t.
Jill DeWit:
That was the whole thing, too. The way it is now … You and I talk about this in general. Let’s try not to reinvent the wheel here. If you’re going to write a book or something, learn from somebody who’s written a book. Let’s not self-publish.
Jack Butala:
Exactly.
Jill DeWit:
That’s near and dear to me right now. I’m not going to try to reinvent it, do it and save a dollar. Who cares? If I’m going to do it, I’m going to do it right. I’m going to go to the experts and copy them.
Jack Butala:
Well said.
Jill DeWit:
Next. There you go. Thanks. I’ll get off my box now.
Jack Butala:
We’re both standing on a box next to each other for a minute.
Jill DeWit:
That’s right.
Jack Butala:
Hey, strangely enough, Kyle’s question leads us to the actual meat of the show. If you have any questions or you want to be on the show, call 800-725-8816. Today’s topic, removing risk from your REI career, your real estate investment career. This is the meat of the show. Jill, can you think of two or three ways to immediately remove a tremendous amount of risk from your REI career?
Jill DeWit:
My goodness.
Jack Butala:
Cut to the chase.
Jill DeWit:
Yes.
Jack Butala:
Go ahead. I don’t want to put you on the spot. I can start it first, if you like.
Jill DeWit:
One is find someone who’s in the area you want to be in who’s already figured it all out and learn from them. How’s that?
Jack Butala:
Awesome.
Jill DeWit:
Thank you.
Jack Butala:
Here’s my number one rule when you’re starting out to remove risk. Find a buyer before you find a deal. This is what Jill and I do every single month. We have a buyer for houses. We wholesale houses and he says some version of this sentence, “Boy, if I had 15 houses in X, Y, Z zip code for this price, I would knock it out of the park.” We’ve all heard people say that. People who own dealerships, car dealership say the same thing, “Boy, if I had 42 4Runners, I’d sell them all this weekend.”
That’s what we do. We make that happen for that person and they are the buyer. We go to that zip code. We send out a ton of letters to everybody. Scrub the data down, not every single person, scrub the data down so it makes sense. We do it all on behalf of one, or two, or three buyers. Now, there’s no sales to anything. We take maybe 50 or 70% of the work out of the whole thing. Never hits the MLS. The people sign it and we actually sned this buyer out to preview the transaction. Jill and I never see the houses that we buy. If our guy goes out there and says, “No, I just don’t like it,” he calls several of his friends or people that he knows in the same business to see if they do. We still make the same amount of money.
On previous shows, we’ve talked about having an acquisition criteria. That’s it. If the deal doesn’t happen, we walk away. Move on to the next one.
Jill DeWit:
Well, I love it, too. We know ahead of time what they’re willing to spend. They’re saying, “I need this zip code, this size house and I’m willing to spend up to X.” That’s the beauty of our data.
Jack Butala:
Anything.
Jill DeWit:
People don’t believe me until I get them to take a look at it.
Jack Butala:
I know.
Jill DeWit:
I’m telling you I can go and pull a list in this intersection within a mile radius of all the three bedroom, two bath with a lot size between this and this, and what else do you want to know? You want to know how long they’ve been there. Do you want to know if there’s any mortgage on it? Do you want to know square footage? Do you want to know-
Jack Butala:
It’s the best data in the world.
Jill DeWit:
It is. Do you want to lean information? Do you want to know what it sold? I can get that detailed on it. Then I can say, “You said,” which I love, “assess no higher than X.” I know I’m hitting the ones that are in my price range that somebody is going to say yes. I can send out strategic letters and I’m not wasting my time or my money.
Jack Butala:
It’s all data-driven.
Jill DeWit:
I’m not driving around.
Jack Butala:
If you’re pulling from substandard data … It’s all over the internet. Go out and check the groups in Facebook and check Success Plant. There are people that have successful stories of pulling data from other sources. They say, “What are you guys talking about? I just bought 14 properties, and I sent out seven letters.” That’s great. I think that you got a great one mailer experience and that’s awesome for you. If you want to make a career out of this and make millions and millions of dollars like we have, and I’m not bragging, I’m just trying to make a point, that’s not going to work.
Jill DeWit:
Good point. That’s a great point because you’re right. My wife and I handwrote all these letters. Great. Are you going to handwrite a thousand of them next weekend,
Jack Butala:
Or hundreds of thousands.
Jill DeWit:
… because now you’re going to turn up the volume? That’s not going to work.
Jack Butala:
There’s a lot of people that say, “Man, I bought 14 properties. I made $40,000 on this whole thing. I’m done. That’s it.” I don’t work like that. If I make 40,000 bucks in a few deals, now I want to make 400 and then 4 million.
Jill DeWit:
I know.
Jack Butala:
It just never stops. If you’re that kind of person, our data program is for you. It’s the best data in the world.
Jill DeWit:
I’m trying to think of other ways to remove risk. Know what you’re doing, have the right stuff.
Jack Butala:
Start with education.
Jill DeWit:
Yeah, be educated.
Jack Butala:
No, start with education.
Jill DeWit:
Have the buyers.
Jack Butala:
The single biggest mistake I see new investors make is that they start looking at deals. I know we talked about it before. That’s the last thing you should do. First thing you should do is get educated wherever you get educated. It might be your parents. It might be a guy on the street that’s a house flipper. God forbid, it might be in a hotel room, not a hotel room, but a hotel …
Jill DeWit:
Hello.
Jack Butala:
Hotel, you know, where those-
Jill DeWit:
What do you mean? Late night in a hotel room to get educated.
Jack Butala:
Those late night TV things where you have to spend $5,000 to get … If that’s what you want to do, that’s fine. Get educated first. Don’t start looking at deals. You’re going to make a bunch of mistakes like the person in Success Plant that was asking this question. It’s a little scary. I’d spend four, five, eight months getting seriously … Imagine if a surgeon did this.
Jill DeWit:
I know. Well, you know-
Jack Butala:
What if you’re a surgeon. I’m going to try a surgery on your face first. Then I’m going to learn that way.
Jill DeWit:
Do you know what’s funny? Like you said, it’s not,
Jack Butala:
Face surgery.
Jill DeWit:
… impossible. It’s not crazy,
Jack Butala:
Face surgery.
Jill DeWit:
… hard but you need … There are moving parts. You could waste months trying to figure out one moving part versus just aligning with the right educator.
Jack Butala:
And money.
Jill DeWit:
And money. That’s what I’m saying. Your time is money. My time is money.
Jack Butala:
Postages, it can get expensive. You don’t want to shotgun this. You want to rifle it.
Jill DeWit:
Exactly. Not only that, like you said, we’re doing that, too. You shotgun it and you have everybody calling you on the planet. You don’t want that.
Jack Butala:
Right.
Jill DeWit:
I think we just covered eight things.
Jack Butala:
It’s bleeding right into my Technical Two. This is the Technical Two, two minutes of property investment advice from our 15-year, 15,000 deal transaction experience. Find a buyer before you find a seller.
Jill DeWit:
Heavy.
Jack Butala:
It’s less than two minutes, less than 15 seconds. If you have a question, you want to be on the show, call 800-725-8816. Jill, do you have some inspiration for us?
Jill DeWit:
I do. Never sell yourself short. That is a good reminder for everyone. I don’t care who you are, even at our level because we were both reminded that today by our marketing person. I thought that’s just something great to share with everyone. Don’t think you’re not … Maybe you don’t have the funds to be at whatever level that you are, it’s okay. Don’t sell yourself short. Go for it. If you want to be, I don’t know, flipping apartment buildings, something like that, just because you don’t have the money in your back account right now doesn’t mean you can’t do this, and figure it out, and find a buyer like Jack said. Then go find a property and make it happen. Yeah, go ahead.
Jack Butala:
Jill, listen. I love it. Sometimes these inspirational things can be silly and sometimes they’re super awesome. This one, in my opinion, happens to be super awesome.
Jill DeWit:
Thank you.
Jack Butala:
The biggest deterrent from people pursuing all those stuff that they want to pursue is money. I’m here to tell you, if you’re waiting for money to do something like this, you’re going to wait forever. There’s way more money out there than talent. If you develop a skill, like we have and like we teach our members how, to finding undervalued, go see undervalued real estate of any type, there will be people with money standing in line once they find out you have that talent. Develop the talent to find undervalued property. Use the methods that we do with mailing and stuff and knock yourself out. You’re going to kill it.
Jill DeWit:
Exactly.
Jack Butala:
Everybody has to get over that first deal. Shoot for the unknown.
Jill DeWit:
Exactly.
Jack Butala:
Right now, this very minute, there are X number of people who own apartment buildings and a certain percentage of them have had it. Maybe a tenant made them nuts. Maybe they’re going through three evictions on a 13-unit building somewhere. Maybe they passed away today, and the kids don’t want anything to do with the apartment building business, and they just want to cash out of it. If they were all standing there with your offer in their hands, your offer that’s half of what the thing is worth, several of them are going to sign it, and send it back, call you and do the deal. That’s just the fact of it.
Jill DeWit:
It is.
Jack Butala:
You don’t need any money. If you have an offer for a property that’s worth half, how hard do you think it’s going to … [inaudible 00:16:17] Craigslist- [crosstalk 00:16:17]
Jill DeWit:
[crosstalk 00:16:17] You’ll find it. Two phone calls.
Jack Butala:
If you own an apartment building, this is how I’ll write the ad. If you own an apartment building, I got a deal and I can’t close it because I don’t have the money but it’s a smoking deal. The property is worth twice what I have negotiated, please give me a call. I’d love to turn the deal over to you for 10,000 bucks. Your phone will light on fire.
Jill DeWit:
All over the country. Yeah, totally.
Jack Butala:
Don’t let money stop you. Well said, Jill.
Jill DeWit:
Thank you.
Jack Butala:
I twisted that all around. What was the advice?
Jill DeWit:
It was never sell yourself short.
Jack Butala:
Shoot for the moon or something else.
Jill DeWit:
You’re so funny. I usually title things … You usually title things in a … Don’t do this. I will say, “Yes, do this.” I’d make the positive spin. This time I did the the negative and you did the positive. It’s funny. Today, that’s weird, I’m glass half empty and your glass full, I guess, today.
Jack Butala:
How can that be?
Jill DeWit:
I don’t know. That’s really, really weird.
Jack Butala:
It wasn’t like that all week.
Jill DeWit:
You’re rubbing off on me. Maybe that’s it. I know what it was. You know what it was. It’s our conversation today and we were told, “Go ahead, have an opinion.” I’m like, “I’ll have an opinion.”
Jack Butala:
My gosh. Yeah, we’ll tell the story soon. Hey, join us in another episode where Jack and Jill discuss how to use information.
Jill DeWit:
And inspiration.
Jack Butala:
To get just about anything you want.
Jill DeWit:
We use it everyday to buy property for half of what’s it worth and sell it immediately.
Jack Butala:
Get there first. Good inspirational stuff, Jill.
Jill DeWit:
Thanks. I just came up with that. I thought you were just talking to me. I’m just talking. I didn’t know … I just said, “That was really good, Jill.” “Thanks.” That was it. I’m done.
Jack Butala:
Welcome to our podcast. Here’s this thing we have called a podcast that we do everyday.
Jill DeWit:
I didn’t know it was still going.
Jack Butala:
The format hasn’t changed for about a year.
Jill DeWit:
Nice. Well, then I thought we were due for a tweak and that was it.
Jack Butala:
You know what? Maybe that’s a sign that we are due for a tweak.
Jill DeWit:
Maybe. I was just confused.
Jack Butala:
I’ll give you a tweak.
Jill DeWit:
Thanks. No, that was funny when-
Jack Butala:
Thanks.
Jill DeWit:
That person told us today.
Jack Butala:
Surgery face.
Jill DeWit:
Surgery face. All right, success pants.
Jack Butala:
I was saying surgery face, not your face.
Jill DeWit:
I’m going to say, “Who are you calling surgery face?”
Jack Butala:
All through the show and our listeners heard it, but you didn’t and that’s what makes me laugh.
Jill DeWit:
Actually I did hear you. It was one of those moments where I’m used to you, Jack. Whether you’re a husband, wife, partners, whatever, business partners, you tune out the other person at times because you know exactly what they’re saying and you’re choosing not to … I didn’t want to feed the bear or whatever the term is.
Jack Butala:
You know what my mom used to say?
Jill DeWit:
What?
Jack Butala:
Don’t encourage him.
Jill DeWit:
That’s it. That’s exactly what I was doing. I was choosing not to encourage that behavior and pretending I don’t know it.
Jack Butala:
You know when you do that, I just bring it up in the after talk anyway.
Jill DeWit:
That’s nice. Thank you. You know what? Watch. I’m going to do it to you in the next episode. I’m going to be quietly whispering something about makeup or something silly. I’ll bring up something really [inaudible 00:19:22].
Jack Butala:
Something totally girly like window treatments.
Jill DeWit:
I’m going shoe shopping later. Don’t tell him. You know what I’ll do? You know what I’m going to do? I’m going to use this time to announce I really overspent for something, and say it under my breath, and then I can say, “I told you.”
Jack Butala:
You know what? I’m going to tell you a secret. When you go shopping and overspend, my life is awesome. I don’t care about the money at all.
Jill DeWit:
I know.
Jack Butala:
I grumble about it a little bit probably out of habit from what my parents used to do. I could care less about overspending. I don’t care. If it just makes you happy for like three days,
Jill DeWit:
Thanks.
Jack Butala:
… that’s what I care about.
Jill DeWit:
Thanks.
Jack Butala:
Jack and Jill, information and inspiration. Let’s go buy some property.
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